S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20

3 Transportation Stocks That Could Deliver Big Gains

Thursday, October 21, 2021 | Sean Sechler
3 Transportation Stocks That Could Deliver Big GainsAs we head into earnings season again, one of the things investors are going to hear over and over again is how supply chain issues are impacting all different types of companies. These problems are a direct result of the pandemic and have put many businesses in a position where they are scrambling to get enough goods or materials ahead of the holiday season. Combine that with an uptick in economic activity as vaccines continue playing a part in the global recovery and you have a recipe for strength in transports going forward.

From delivery truck drivers to shipping train conductors, it’s fair to say that companies in the transportation sector are going to play a critical role in dealing with those supply chain issues and helping the economy get back to normal. Keep in mind that many of these companies are also facing weak year-over-year comparisons given how big of a business drop-off they saw in 2020 with pandemic-related disruptions, which means they could provide some big earnings beats to wrap up the year.

If you are interested in gaining exposure to some of the top names in the sector with upside, here are 3 transportation stocks that could deliver big gains:

CSX Corp (NASDAQ:CSX)

Adding a position in one of the top railroad companies in the country makes a lot of sense at this time, as these businesses tend to be closely tied to economic growth. There’s also a lot to like about how rail transportation offers cost advantages over trucking due to more fuel efficiency, which is particularly important given how oil prices have been rallying. Those are a few reasons why CSX Corporation stock is poised to outperform, as the company operates a U.S. rail network of roughly 25,000 miles and transports a variety of different raw materials and finished goods.

The company just reported a Q3 EPS beat and saw its revenue increase by 24% year-over-year to reach $3.29 billion, which is a good sign that all of its business lines are recovering nicely. It’s also worth mentioning that CSX acquired Quality Carriers in July, which is the largest provider of bulk liquid chemicals transportation in North America and a move that further diversifies the company’s business model. Finally, this stock is a solid option in the transportation industry given how a large portion of its railcar volume comes from consumer goods, which means CSX will benefit from plenty of business over the next quarter during the holiday season.

FedEx Corp (NYSE: FDX)

If you’re interested in a quality transportation stock that is trading at a deep discount, look no further than FedEx Corp. Shares of the leading global provider of transportation, e-commerce, and related services have been taken to the woodshed after the company reported disappointing earnings last quarter, which could present a nice buying opportunity for value-oriented investors. While the company’s management recently warned investors that factors like rising labor costs could impact earnings, FedEx is still a blue-chip name that should be able to deliver strong returns over the long term. The labor shortage should also just be a temporary factor, which means that the recent weakness could be an overreaction.

Keep in mind that trends like rising e-commerce volumes will translate to strong top-line growth for the company over the years, and with free return shipping becoming the new normal among retailers it’s safe to say that FedEx will have plenty of work going forward. FedEx also announced that it is increasing its rates in 2022, which should boost margins and help to combat some of the near-term headwinds the company is dealing with. Finally, the company recently boosted its dividend payout by 15%, which should give investors additional confidence in adding shares.

Matson (NYSE: MATX)

Marine shipping is a very important area of the transportation sector, yet many of the companies in the industry don’t receive a lot of attention. That shouldn’t steer you away from a company like Matson, which is experiencing explosive growth and has been benefitting from higher shipping rates during the pandemic. Honolulu-headquartered Matson operates through two segments, ocean transportation and logistics, and provides freight transportation services across the Pacific to places like Hawaii, Alaska, Guam, Micronesia, along with expedited services from China to Southern California.

The company’s Q2 results were quite impressive, as Matson reported a revenue increase of 67% year-over-year to $875 million along with a massive net income jump of 395% to $162.5 million. The company should continue benefitting from elevated demand as the global economy gets back to normal, and it's worth mentioning that Matson’s business in China is booming at the moment, another reason to consider adding shares. The stock has rallied over 45% year-to-date and could certainly continue to deliver big gains for investors interested in transports.

Should you invest $1,000 in CSX right now?

Before you consider CSX, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and CSX wasn't on the list.

While CSX currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Matson (MATX)2.5$83.75-4.3%1.43%5.90Buy$81.00
FedEx (FDX)3.5$238.15-2.2%1.26%12.65Buy$316.41
CSX (CSX)2.6$35.57-1.9%1.04%22.37Buy$36.65
Compare These Stocks  Add These Stocks to My Watchlist 

Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.